EXTRA: BP Joins Shell In Profit Rise But Also Lifts Oil Production

Bob Dudley chief executive said that 2017 had been one of the strongest years in BP’s recent history Suzanne Plunkett Reuters

Author Orlando Mckenzie

07 February, 2018

BP's underlying replacement-cost profit - which excludes fluctuations in the value of crude oil inventories - more than doubled to $6.2 billion a year ago.

Underlying replacement cost profit was $2.11 billion for the fourth quarter, compared to $400 million a year ago. Last week, the oil giant hadannounced that it hoped to double North Sea oil production to 200,000 barrels by 2020.

BP is the latest oil major to benefit from climbing prices, with Tuesday's results marking one of the strongest years in the company's recent history.

The results come one year after BP launched a five-year strategy aimed at returning the group to growth, as it continues to recover from the devastating 2010 oil spill catastrophe.

Fourth-quarter oil and gas production rose 18 percent from a year earlier to 2.58 million barrels of oil equivalent a day. The results come after the FTSE 100 group, whose performance has been pressured by costs related to the Gulf of Mexico oil spill, became the first European oil and gas major to resume share buybacks a year ago.

BP further reported that its exploration had delivered the most successful year for the company since 2004, while the group's upstream production jumped 12 percent.

In 2017, BP managed to cover the costs and pay full dividends at oil prices of 50 Dollars per barrel.

Looking further ahead, the company said in mid-January it would be expecting 2018 payments of around USD3.0 billion related to the oil spill and said that settlements would soon begin "winding down". As of October it had managed just USD1.0 billion in divestments, but achieved USD2.5 billion in the fourth quarter overall.

Operating cashflow amounted to $6.2bn and $24.1bn for the fourth quarter and the full year respectively. The company is back to breaking even at current oil prices, but will still maintain capital discipline and plans divestments of between $2 billion and $3 billion in 2018, he said.

Dividend per share remains at 10 cents.

There's no guarantee that the cost of the Deepwater Horizon disaster won't rise again, but it will be entirely manageable from cash flow this year and next, Chief Financial Officer Brian Gilvary said by phone.

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